Via Facsimile and U.S. Mail
Mail Stop 6010
June 27, 2005
Mr. Rob Hutchison
Chief Executive Officer
Applied DNA Sciences, Inc.
9229 W. Sunset Boulevard, Suite 830
Los Angeles, California 90069
Re: Applied DNA Sciences, Inc.
Amendment #2 to Registration Statement on Form SB-2
Filed June 16, 2005
File Number 333-122848
Dear Mr. Hutchison:
We have reviewed your filing and have the following comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
FORM SB-2
General
1. We understand from your counsel you will be obligated to issue
penalty shares if this registration statement is not declared
effective by a certain date. Please include a discussion which
explains in sufficient detail the provisions of the penalty shares
in
your prospectus. Additionally, please consider adding a risk
factor
discussing dilutive effects and other material adverse consequence
should this occur.
2. We note your response to comment 2. Please revise your
disclosure
to indicate that Rick Langley of RHL Management, Inc. is Richard
Langley Jr.
3. Prior to requesting acceleration for effectiveness, please
amend
your Form 10-KSB for the year ended September 30, 2004 and your
Forms
10-Q for the quarters ended December 31, 2004 and March 31, 2005
to
comply with our comments on your Form SB-2.
Risk Factors
If we Fail to Close on our Acquisition Agreement with Biowell ...,
page 4
4. Please revise your risk factor to update the disclosure
concerning
the status of the acquisition. We note on page 22 all conditions
to
closing have been met except for approval by the shareholders of
Biowell and reorganization of the board. Please discuss whether
Biowell shareholders have voted on the transaction, if not, when
will
such vote be taken.
Item 26. Recent Sales of Unregistered Securities, page II-2
5. Please indicate if any underwriters were employed in connection
with any of the transactions set forth in Item 15.
6. Please revise to identify the investors or classes of investors
in
the unregistered offerings you describe. Please note that we
consider accredited investors to be a recognized class but do not
recognize unaccredited investors or individual investors to be
acceptable classes.
7. Please revise your disclosure to indicate the exemption you
relied
on for the privately placed securities from September 2002 to
December 2003. Also, please include the number of individuals who
purchased in each of the transactions described.
Consolidated Financial Statements
Statements of Losses, page F-3
8. We acknowledge your response to comments 17 and 18 per our
letter
dated May 23, 2005. We continue to believe that, according to
paragraphs 11 (c) and 13 of SFAS No. 2, the license fee paid to
Biowell Technologies represents a research and development cost.
Given the importance of the Biowell Technologies license to your
future plan of operations, which clearly involves research and
development activities, amounts paid to Biowell pursuant to that
license agreement should be disclosed separately on your
statements
of operations. Please revise your statements of operations for all
affected periods accordingly.
Notes to Consolidated Financial Statements
Note D- Capital Stock, page F-21
9. We acknowledge your response to comment 19 per our letter dated
May 23, 2005; however, it is not clear that you addressed our
comment. Please revise your disclosure in the notes to your
financial
statements to clarify the following for each issuance of common
stock
to non-employees in exchange for services: the period in which the
employee rendered the services; the period in which you issued the
common stock and recorded the related financial statement expense;
and your basis for recording each amount in the applicable period.
Please provide to us additional information to clarify the
difference
between the issuance date of the stock and the valuation date, as
applicable. Please note that if the stock is not issued in the
same
period as when the services are rendered, the services should be
recorded in the period the services are rendered in accordance
with
paragraph 8 of SFAS 123 and EITF 96-18. When the stock is issued,
the stock should be recorded as issued at that time at the fair
value
on the date issued. Please revise your financial statements
accordingly or tell us why you believe your financial statements
comply with GAAP.
10. We acknowledge your response to comment 20 per our letter
dated
May 23, 2005. Please provide us with the basis for using different
fair values of your common stock for the same period for the
numerous
issuances during the periods presented. For example, the 586,250
shares had a fair value of $0.13 per share in October 2002; the
9,000
shares had a fair value of $0.065 per share in October 2002; and
the
10,140,000 shares had a fair value of $0.0001 per share in
September
2002.
11. We note that you have issued capital stock below par value and
that you have recorded negative additional paid-in capital.
Please
tell us why this is appropriate.
Unaudited Condensed Consolidated Financial Statements
Unaudited Condensed Consolidated Statements of Cash Flows, page F-
81
12. Please revise your unaudited condensed consolidated statements
of
cash flows to present line items comparable to those presented in
your Form SB-2/A filed with the Commission on April 29, 2005. We
believe Instruction 2(1)(iv) to Item 310(b) of Regulation S-B
prescribes that you present detail sufficient to allow investors
to
compare your interim financial statements with your audited annual
financial statements. This seems particularly important
information
for investors in assessing your liquidity, given your going
concern
status.
Notes to Unaudited Condensed Consolidated Financial Statements
Note E- Subsequent Event, page F-95
13. Please tell us what consideration has been given to including
financial statements and pro forma information with respect to the
pending Biowell acquisition. It appears that the transaction may
be
accounted for as a reverse acquisition.
* * *
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please file
your cover letter on EDGAR under the form type label CORRESP.
Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
You may contact Amy Bruckner (202) 551-3657 or Mary Mast at
(202) 551-3613 if you have questions regarding comments on the
financial statements and related matters. Please contact Albert
Lee
at (202) 551-3654 or me at (202) 551-3715 with any other
questions.
Sincerely,
Jeffrey Riedler
Assistant Director
cc: Andrea Cataneo, Esquire
Sichenzia Ross Friedman Ference LLP
1065 Avenue of the Americas, 21st Floor
New York, New York 10018
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Rob Hutchison
Applied DNA Sciences, Inc.
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